The Ramsey Show - App - Should We Pay Off Debt or Invest? (Hour 2)

Episode Date: February 13, 2023

Ken Coleman & George Kamel answer your questions and discuss:   "Should we stop investing while in Baby Step 2?", "Can my son be the beneficiary for my insurance?", "Should we save extra income to pay off debt?" How to respond to a low salary job offer, "Should I save for retirement or pay off my debt?" "Should I keep building my emergency fund or invest?" "What should we do after paying off our home?" Have a question for the show? Call 888-825-5225 Weekdays from 2-5pm ET Want a plan for your money? Find out where to start: https://bit.ly/3nInETX Listen to all The Ramsey Network podcasts: https://bit.ly/3GxiXm6 Learn more about your ad choices. https://www.megaphone.fm/adchoices Ramsey Solutions Privacy Policy

Live from the headquarters of Ramsey Solutions, broadcasting from the Pods Movie and Storage Studio, this is The Ramsey Show. We're going to talk about your life, specifically your money, your work, and your relationships. I'm Ken Coleman. George Campbell joins me this hour. We're here for you.

The phone number to jump in is 888-825-5225. That's 888-825-5225. George, you warmed up? I'm caffeinated and I'm a little bit irritated, so it could be an interesting show. I like where this is heading. Let's go to Eden in Louisville, Kentucky. Eden, how can we help? Hello. I was just wondering, so we are currently on baby step number two. We have about maybe 12 to 14,000 in debt with like car loans and stuff. But we have been putting money towards our IRA and 401k for about a year now before we, you know, started with the baby steps. And I was just wondering, we're currently putting 3% in 401k and 3% in IRA and his employer is matching the 3%. Basically, I'm wondering, should we stop doing that? You know, just start putting it all towards baby step number two or,, um, you know, it's just,

I think it's like 60 bucks every paycheck. So it's not a whole lot. Um, I don't know if we should just continue doing that or. Yeah. Great question. Well, part of the plan is gazelle intensity and baby step two. And that means every extra dollar that's going anywhere else is now reallocated towards that debt. And this is a hard one emotionally for a lot of people to grapple with going, well, I'm getting the free money from the employer. Why wouldn't I continue to do this? You guys talk about the power of compound interest, but we found the shortest path to wealth is focused intensity. And when you allocate those dollars, even if it's 60 bucks a paycheck, you do that in the 401k, the IRA, it's 120 bucks a paycheck. So now we're talking 250 bucks a month round numbers.

And now we multiply that out. We go, okay, well, that's, wow, that's a few thousand dollars that could help us become debt-free even faster. And then once we get back to investing, we're no longer doing these 3%, we're doing 15%. And so you're going to make up for that lost time and you're going to retire a millionaire if you just follow the plan. But again, it's a hard thing emotionally to grapple with. And I don't want to, you know, minimize that, but that's exactly what I did. And it's exactly what people who go all in on the plan do. And that's where they see the

results. So how much faster would you be debt-free if you paused all investing right now? Well, we're already, you know, we're trying to go all in on everything else. I did the math, and we should be completely debt-free this time next year. So we'd probably cut it down at least a quarter. What's your income? About $55,000 to $60,000. Okay. So household income, $55,000 to $60,000, and you've got about $14,000 in debt. And so you're saying it'll take 12 months to pay off $14,000? Roundabout. We're putting our entire tax return towards the debt. So we're going to put a big dent in it once we get that in. So here's the question. How can we speed that up? You're going, all right, we make $60,000. It's going to take us a year. That's about $1,000 a month going towards debt. What if we could put $1,200 towards the debt? What if we could put $1,300 towards the debt? How does that speed up

the process? And that's where it starts to get exciting. And that's when you start to go, okay, I'm willing to pause the investing. I'm willing to take on the side hustle because now I see a path for us to do this in eight months instead of 12. And now that's four more months where we're not making payments and paying interest. Four more months closer to investing again and building up that emergency fund. Do you feel that momentum that gets built? Right. Yeah. And so that's what I encourage you guys to do so that it, you get to baby step four even faster. And that's the goal. What is the shortest path? Because right now we're doing a lot of things at once and we're not feeling the progress on either side. Okay. Yeah. I'll figure that's

probably what you have to say. We're so unsurprising, Ken. I wish I could tell Eden some magical stuff she's never heard, but the truth is it's the boring stuff we kind of need to hear and go yeah that's right i just need to go to the gym and work out and not get that special lap band i saw on tv that's supposed to make me lose weight in my sleep yeah right yeah it doesn't work and that's how it works with money too yeah boy that's a really good point i love that all right let's go to scott now in fort myers florida scott how can we help hi thank you guys for taking my call. Just real quick, I am on baby step two. I've paid off $86,879 in about two years, and I have $72,000 more to go. Way to go, man. In the process. We're trying. My question actually is about term life insurance.

I have a 16-year-old son. I'm a single father and have full custody with visitation. Can I put him as my – The beneficiary? Beneficiary, thank you. Or do I have to have my mother do it for the two years and then switch him over? So you can legally name him beneficiary, but he will not be able to access those funds until he's a legal adult. And so that's where things get a little hairy, a little tricky. And so it's probably easier to leave it with the guardian, or you can look at creating a trust to where there would be certain rules as to when he would access that money. But the danger is, you know, you give an 18-year-old $500,000

and hope that they're going to be okay. And so that's the more worrisome part. There's some other things you can do, like the Uniform Transfer to Minors Act you can look into. You can also leave the money with the insurance company, and he just doesn't get it until he's an adult. So nothing wrong with leaving it? He's listening to your show with me, not right now, but all the time. So he's pretty good about money. He's saving up for his first car.

That's fantastic. Well, it's a great, I mean, you're thinking about this the right way. And if you want to talk to a local lawyer about what it would look like to set up a trust, what it would look like to, who'd you say would be the guardian? My mom. So your mom could control the funds. If I were to pass, it would be his mom. Okay, would be the legal guardian.

Yeah, yeah. Got it. Well, I definitely cross those T's and dot those I's and make sure that the way that flows is the right way, at least in the next few years. You can always change it later on and go, all right, he's an adult now. Things are different.

But it looks like you raised a great kid, man. Thanks for the question. Well, single parents, man, they've got a lot going on. And a lot of single moms, of course, get the praise that they deserve. We want to honor them all the time. But then we've got a single dad here who's going about this the right way. Making sure his family's taken care of. You can help a kid figure this stuff out early on.

It's a game changer because they're going to get bombarded with a whole different set of messages by culture. Well, what's the hottest new trend for young people right now? Well, we were just looking at this, Ken. There's a Twitter account called Coinfessions, and it's all the crypto people confessing all of the terrible things that have happened. And what we're seeing is a lot of young people who made a lot of money very quickly, and they're unable to handle it,

and their life completely implodes. Or they lose all the money because they were a little greedy, and they had 100,000, even 800,000 one of these kids had at 20 years old, lost it all in a few trades, and his life is ruined. And they go into deep anxiety and depression. And so the truth is no 18-year-old, 20-year-old should be dealing with a scenario where they're just handed a million dollars and told, be wise, they're just not ready for that emotionally or financially. So that's what I kept thinking of when I heard this story of him going, all right, he's going to be left a lot of money at 18. And I think of the prodigal son in the Bible and you go,

please don't make any bad decisions here. We've got to live a little and learn some things. But it sounds like he's raised a great kid. There's a reason why so many lottery winners go broke. It's just such an unbelievable change. If you're not prepared for it, you don't have a construct for it. That's why I like the get rich slow plan. You tend to keep it that way.

Yeah, I like that. Get rich slow. Well, that's not going to be very popular. No. No one wants to hear that. But it does work. All right, don't move. More Ramsey Show coming up right around the corner. welcome back to the ramsey show i'm ken coleman i'm joined by my colleague george camel

we are excited that you are here. George, you know, it is a fact of life that sequels just don't do well. I don't know if you have a strong opinion on sequels or not. I do, because I tried to watch Space Jam 2. Yeah, couldn't get through it. Don't waste your time, folks. Yeah, there it is. And, you know, sequels just kind of get a bad rap. All you Macaulay Culkin less home alones i'm

looking at you chandler ross joey rachel monica just staying the night he's where he belonged someone wrote that i'm going to take issue with that i i'd love to see a revival of friends where are they now where do they hang out this time they did the reunion yeah i missed it wasn't much of a reunion that was more of a conversation. Yeah. Well, what this means is that the wildly popular product, Question for Humans, Friends, second edition by Dr. John Deloney. These are conversation starters, very, very popular, and you demanded more. So here's one, George. What's a common phrase or saying that you have no idea what it means?

Oh, that's a good question. I mean, you hear the old timey saying like one fell swoop or, you know, the bird in the bush is worth two in the hand. That's why I have no clue what that, when people say that. You don't know what a bird in the bush is worth two in the hand? No idea what that means. It's interesting. Do you, you said it like I know exactly what it means. I think I do, but I started to go, I've never even thought about it. So a bird in the hand is actually worth two in the bush you said it wrong so i had to read i got it so i had to focus so what that means is a bird in the hand i've got this one i got the bird here that's worth more than saying well there's two over here in the bush i can go get those if i want no take the

opportunity you have before oh okay that was actually a good explanation i thought you were just fudging your way through it no i literally was processing because you said it wrong you're like a bird in the bush and i went that's not right and i hadn't heard you i'm trying to throw you off the scent of the trail i'll tell you one that i don't know i know what it means but i don't know what the gander is do you know what this phrase is? What? You know, what's good for the goose is good for the gander. Oh. Couldn't tell you what the gander is.

Yeah, I'll look it up. Who invents, who gets to invent these? Was there a marketing meeting back in 1928 where they decided on all of these? Well, they talked differently back then. So anyway, all that to say, we've got to- This is the kind of juicy content you can create- Yeah. By getting the questions for humans. Yeah, so we've got the kind of juicy content you can create yeah by getting

the questions for humans yeah so we've got the uh first edition and now oh wait a second this is the question for humans friends edition uh do yourself and your friends a favor pick up the second friends also we have a second friends edition that people wanted more okay it'd be great if i was comprehending what i was reading ge George. Ramseysolutions.com slash humans. Ramseysolutions.com slash humans. What an interesting URL that is. It is. Slash humans.

Yeah. Oh, it is rather macabre. Do you know what that word means? You're throwing me for another loop here. Yeah, go look that one up during the break. That's your word of the day, macabre. I'll Google it while we take this call. There you go.

Alyssa is in Louisville, Kentucky. Alyssa, how can we help? Hi, George. Hi, Ken. Thanks for taking my call. You bet. What's up? I have a little bit of a this or that question. Oh, I like that. Well, we're on baby step two, me and my husband, and we lost our mother-in-law at the end of last year. And yeah, so obviously that's a huge, huge storm in our life. Now, he is the sole heir to her estate. We're taking care of a lot of stuff right now. And after all is said and done, it will help us out a lot. However, we're going through the probate process.

We have funds coming in from life insurance to pay down baby step two completely. But what we don't know is whether or not we should sit on it until probate is over, just in case, because my mother-in-law was not the best at her finances. We'll just say that. And there were some hidden things that we found after she passed that we have paid off what we know, but with the estate process, things come out of the woodwork. And so we're a little nervous to use that money because there won't be much of any leftover if we do use it for our baby step two. Um, so I guess my this or that is,

should we consider the storm mode or should we go on and just put it all on baby step two and try to cash flow whatever expenses may come up during probate? So do you have the money now to pay off all the debt or are you saying you will once probate's over? No, we have it now because life insurance is not part of her estate technically. Okay. So what is the worry? Let's walk this out. Let's say you pay off all your debt tomorrow, and now you're on Baby Step 3. Do you have enough to fully fund that, or is that going to take a few months?

It will take a few months. We're inheriting our house, and so we won't have a house payment, which is another huge blessing, which will increase our cash flow for Baby step three. But, you know, we don't have like a super huge income and we just don't know what might be coming. Well, you won't be personally liable for any of this. The estate will have to eat that. And so you're not going to get on the other end and owe money. The detail on that is that her estate also goes also all of it to her son. And if we're living in the house and we're using it, and then the someone comes against the estate, we'd have to give up the house. If there's a lien against the estate? If a creditor comes up during probate and they have a claim to the estate, then we would have to sell the house

in order to liquidate the funds to pay the creditor, if you see what I'm saying. So it kind of puts us in a pickle. So how long is this probate process going to take? In Kentucky, the creditors have six months from the date of the grant of probate to come forward with their claims. And his aunt, my husband's aunt, is the executor. It'll be about August when that's over, when we know what all the debts will be. I still think you're going to be in a better place financially if we knock out all the debt today, we have no payments, and we begin saving up that emergency fund. Okay.

That would still put you in a better spot until August versus just hanging on to the debt, not sure. How much debt do you have and how much money is in the bank? So we're also counting on tax refund and stuff. That's probably all going to come in this month because all that's just in process. We'll have about $21,000 in debt, and it'll be just about that much, maybe $22,000 or $23,000 that we will be receiving. Okay. We already have the life insurance. We're waiting on a couple other things, but they're coming. What's your household income?

$55,000 to $60,000 gross. Okay. I think it'd be a great goal to pay off that debt and have a fully funded emergency fund by August. I would love that. And that way you are sleeping well at night, you've got money in the bank, and we'll figure out what happens when that time comes. But I don't want you to have this in limbo, freaking out about it until then, while you're still making payments on this.

I want you to make progress until that time comes. And hopefully it's all clean. There's no liens, no creditors are coming after you guys. And you walk away from this thing and you're able to just grieve. I'm so sorry for your loss though. Thank you. Thank you. Man. Ooh, that's tough, Ken. It is. A lot of loss just in today's show. People are going through it. I know you help a lot of people on your show and you're a great encourager. It just feels like it's a heavy time out there. We try to have fun just to bring some levity to the show, but man, it can just get heavy.

Yeah. And I think that when life gets heavy like that, what we've got to do is certainly in financial decisions, professional decisions, personal decisions, the big, big decisions, just heal, heal first, you know, like just, let's not try to, you know, grit our way through it. Let's, let's be weak. Let's be vulnerable. Let's get healthy. And then on the other side of the healing, uh, as you're healing, then your perspective changes anyway, because each day on the other side of the healing as you're healing, then your perspective changes anyway, because each day on the other side of healing, you're very forward thinking anyway. But I think people get into trouble. For instance, a lot of people haven't laid off. I mean, you know, Disney laid off 7,000 employees last week. We know from psychology research that when you're laid off from a job, even when it's expected,

it has the same emotional impact as losing a loved one. And so we're not equating the two. We're saying the emotion is similar. It's devastating. And so whether, again, in your work life, your professional journey, your financial life, your relationship life. Take the time to heal, get the help you need, and then begin to make the big decisions going forward. Don't make big decisions in the midst of that pain. It's very, very hard to kind of have the best wits about you. And that's always something we want to remind you, those of you that are going through a tough time. This is The Ramsey Show. welcome back to the ramsey show where we talk about your life specifically your money your work and your relationships. George Campbell is joining me. I'm Ken Coleman, and I am the Ramsey personality focused on work.

So if you've got your work-related question, that could be anything from, I don't know what I want to do. Should I go to school? Should I not go to school? I want to take a promotion. I'm not getting promoted. I'm getting rejected, overlooked. Anything work-related. I've got a toxic environment. I'll take those promotion. I'm not getting promoted. I'm getting rejected, overlooked, anything work related. I got a toxic environment. I'll take those questions. And to that end, we've got a work-related question here, George. Our question of the day from Alina in the official Ken Coleman community on Facebook. She says, how do you respond to a job offer that does not meet your desired salary? Oh. Okay, it's a good question, right?

So do you go in after they make their offer and do all this big grand negotiation? What do you think, George? Yes or no? I don't think the way to go about it is show back up and go, yeah, I need 50 to make this work or I'm out. Okay, All right. So, you know, if the offer was 45 and you thought in your mind it was going to be 50 or 60, for example. Well, it all depends on how tight are you on that paycheck. So if you need 50 to make ends meet and they offer you 45, you're in a quandary. Now, I don't think there's this big grand negotiation anymore,

but what I do think you can say in that situation is, hey, listen think there's this big grand negotiation anymore but what i do think you can say in that situation is hey listen uh let's say you were in this case making 50 previously or close to you say look i can't do it for that i want the job but i just literally with my budget i cannot make ends meet on that i appreciate the opportunity but that's the best you can do unfortunately i'm not going to be able to stay but that's the best you can do. Unfortunately, I'm not going to be able to stay. Now, that's not a negotiation. That is you saying very clearly, based on real numbers, it's not a tactic. It's, I can't do it. Then you'll see what they can do. But this idea of trying to negotiate is just not allowed. Hopefully, it comes up beforehand,

before the job offer. There's some discussion of compensation, benefits, package. Well, but you can't expect that in today's world. You know, there's a big push for transparency and pay and put that out ahead of time. But companies that don't want to do that for very understandable reasons will come back and they'll get around it another way. So when you're in that conversation, you got to know what's that walkaway number. If that number doesn't get to here, I'm walking away. And that, by the way, will come across in your communication to where you really don't have to negotiate. And that's the thought, George. You don't have to negotiate if you know what your number is and what you're willing to walk from.

The key is to not put the HR team in a defensive posture where then it backfires. And the real thing is, let's do some research. Do you know what the market value is based on your skill and experience? And do you think this company is going to be competitive? You can do that homework ahead of time. What about when they kind of make some promises, Ken, or they say, well, I know this is not exactly what you're hoping for, but there's a big trajectory, you know, within the next six months, you could be making, you kind of start to get a little bit of that as well. Yes. And so what I would do, if they start to say that, you're going to go, okay, what's that measurement look like? So what are the results that I will need to produce? And how will we measure those results?

Because if they can't give you specific answers to that, now it's one of those, they're just dragging you along. They're just dangling a carrot. And I shared this on the Ken Coleman Show today. This is relevant. Paychecks just put out a new study. 80% of people who change jobs in 2021 and 2022 regret leaving their previous job. Whoa.

That's a staggering number. What was the reasoning? Did they have any? You know what, right from the number one reason? It wasn't the paycheck. It was they missed their friends from their previous job.

Ah. This relationship component. It's a big shift. It's like moving to a new city. Yeah. I mean, we can't undervalue relationships in the office.

I mean, you and I sit next to each other. I can't imagine ever leaving here and not having Ken Coleman in my life. I don't know what I would do. I would be distraught if I didn't see you every morning. And that perfectly coiffed beard of yours and that meticulous part in the side of your hair.

These are just the surface things. Wow. Not to mention your- My character. Your character, your integrity, your sage advice, you know, all the things, George. I love when flattery turns to sarcasm real quick. That's the Ken Coleman I know and love. That's what we do.

888-825-5225 is the number. Rebecca's joining us in St. Louis, Missouri. Rebecca, how can we help? Hi, guys. Thanks for taking my call. You bet. So I am a 1099 employee about to start a new position. It'll be the highest income that I've ever earned. Um, and I've been divorced since 2020 and have steadily increased my income, but

I am also at the lowest point financially and I have no money saved up for retirement. And so before I get too used to this new income, I wonder if I should set up retirement plan as part of my budget moving forward when the money starts coming in, when the income starts coming in. What's your new income? It'll be $95 an hour. Awesome. That's, you know, before taxes. Is that kind of a full-time 40 hours a week? Yes. Wonderful. So we're talking almost $200,000? Yes. Way to go. Okay. And how much debt do you have? A lot. $155 just in student loans. And then I've got another $55 in personal debt with a car, credit cards, medical bills, a furniture loan with other things. But I haven't worked since the middle of December., I had money saved up for my taxes for last year. And I've been living on that now because I, I've been between jobs and

now my savings is gone and I'm going to have a pretty good tax bill. I know. And I have a good accountant. She's working with me last year was my first year being 1099. And the income was not where we had predicted it would be at that time. So anyway, I know I'll have a tax bill as well, and I have no more savings. Okay. So right now, I know we're worried about retirement. We're going to get to that. But right now, I want to clean up this mess, this pile. I want to get the IRS off of our back. So your A1 is going to be getting rid of this debt, which with this newfound income, we can do fairly quickly. We're talking two or three years, right? Yes.

That's what I figured too when I mapped it out. Yeah. I was hoping for that. I mean, if you make $200,000 and you have $200,000 in debt and you can live off of $50,000 or $60,000 or $70,000 even, you've got $100,000 plus to throw at the debt, and this thing's grand in debt and you can live off of 50 or 60 or 70 even, you got 100 plus to throw at the debt and this thing's gone in two years. Yeah. And then think about where you're at. You have no payments in the world and you make 200 grand and let's say, how old are you right now? 46. Okay. So let's say at 48, you're completely debt-free and you're maxing out every single retirement vehicle you can.

Well, you still have almost 20 years to just invest and build wealth with no payments in the world. So you'll be able to build wealth. And you can do that through a lot of... Do you have any retirement vehicles right now through your employer? No, nothing. It'll all be on me. Okay. So are you going to be able to do a SEP IRA or solo 401k? Yeah.

So I was looking at that too. Like I think that would help with my tax bill in the future. Like if I set some money aside now maybe and do put some money into an IRA down, you know, at the end of the year or something, it might help with my taxes also, but also benefit me with during my path towards retirement also. I think the best path towards retirement is getting rid of $200,000 sitting around our neck with interest. That's how you're going to be able to, Because you can retire with dignity if you just don't have any payments

and you have some income coming in. And so that's the goal. Follow the plan all the way through. And making $200,000 at 48 years old, two years from now, completely debt-free, you're going to be able to save another $100,000, $150,000 a year. There's a lot of things you can do once you hit $50 with catch-up contributions. You have a lot of time on your side, Rebecca. I know it feels like you don't because you're 46, but there's a lot of life ahead. Yes, my goodness. You're young. She's

younger than me, George. Make sure we emphasize that. She's got plenty of time. Yeah. I mean, Ken, you've got a lot of life to live, buddy. I hope so. Goodness. I hope so. It's not too late, folks. Whether you're 30, 40, 50, even 60, becoming debt-free and maximizing your greatest wealth-building tool, your income, can help you retire with dignity when you want to instead of when you have to. He is George Campbell. I'm Ken Coleman, and you're listening to The Ramsey Show. Don't move. សូវាប់ពីបានប់ពីបានប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពីប់ពី Welcome back to The Ramsey Show. I'm Ken Coleman, joined by George Camel. We're here to take your questions about your life, your money questions, about your work questions, and relationship questions. We will get those answered for you. 888-825-5225 is the number if you like the show.

Please consider subscribing, leaving a review, and sharing it with a friend. We want to get it out to as many people as possible because we're bringing hope through practical answers and a clear path forward for you, again, in your work, in your money, and in your relationship life. I'm taking your work questions this hour. Andrew's up in Los Angeles, California. Andrew, how can we help? Hey, guys. Thanks for taking my call. So I am making about $2,100 a month and I'm wondering how much of my money I should just be saving towards a bigger emergency fund or if I should start investing now. I'm only 23 years old. Cool. Okay. What are you doing for work? I work at a Starbucks in Los Angeles.

Awesome. And you're saying you've got an emergency fund that is what size right now? I got about $13,000 in the bank. Okay. And how many months of expenses would you call that? I'd say about like nine to 10 months. Wow. That's plenty.

How cheap is your rent? I'm paying about $1,100 a month in rent okay so it's not nine months worth of expenses then because your rent alone would yeah true enough okay okay but it's my job is if i do happen to get fired or downsized i'm comfortable enough getting a new job fairly quickly in the service industry okay Okay. That I'm not too worried about having a massive, massive emergency fund. So where is the need then? Because you're saying, should I keep building the emergency fund? What would be the purpose of that if you've got three to six months already?

Well, I'm taking classes full-time as well. And I'm wondering, or for mechanical engineering. Awesome. And I'm wondering if it's worth just foregoing or investing for two, three years until I have more wiggle room and a higher salary rather than a practically minimum wage employee. And so do you have any debt right now? No, I do not. My parents actually raised me on the Baby Step program, and I avoided debt altogether in my life.

And you're able to cash flow your coursework for the mechanical engineering? Yeah, I'm taking classes through Starbucks, and they're actually free. Oh, that's awesome. Way to go, man. So why not go ahead and start investing? Does Starbucks have any retirement options, 401K? I haven't looked into that too much. I don't know for certain. I'd imagine they do, but I'm just wondering if it's not more wise just to hold off until I have,

like, is that, or do you think my emergency fund is sizable enough that I can just avoid? Well, that's where if you're doing a monthly budget and you take your bare bones expenses that, hey, if something went down, I need to cover these expenses. Take that, multiply it by three to six months, and that gives you your number. If that's the, I think 13 is sounds like a reasonable number for you, then I would begin investing. Investing doesn't happen once you start making a certain amount of money. It happens when you have no debt and an emergency fund in place.

Because what we're really trying to do is build that savings muscle where we get used to 15% of our income, regardless whether it's 30 or 300,000 going into retirement. And I would imagine Starbucks has some decent investing options that can get you started. Like I said, I don't know for certain, but I imagine they do as well. Yeah, Andrew, I want to echo what George said. You're in good shape. If you want to put a little bit more money in the emergency fund, go for it. But the point is, is pretty quickly you need to start investing so that you just get into this rhythm, this routine. It becomes a habit for you,

like brushing your teeth. You're investing every check and that's going to serve you long-term, big time. As young as you are and as financially responsible as you've been up to this point, that's why you want to do this. You're fine. You don't have a lot to cover. If you were to have a true loss of work or some type of huge emergency, you don't have a lot to cover. If you were to have a true loss of work or some type of huge emergency, you don't have a lot to cover. So you're in good shape. I guess I am. I guess I really just need that confirmation, I guess. But you do, but you don't. And we're encouraging you, but you know what you need to do? George gave you the answer. You need to write these numbers out. Get it out of your head and write it down. Go, okay, how much money would I need to have a fully funded three-month emergency fund? What would six months look like? You can go either way, anywhere in between there,

but actually get that number. Be absolutely certain what that number is, and you're going to be more confident. And then just do the research, do the homework with your HR folks or the website and the backend and say, hey, help me understand this. What are my investing options? I'm going to go ahead and do 15% of my income, even if it's from 15 bucks an hour, 20 bucks an hour, whatever it is. And as you create more income, you're just going to increase your investing along with that. And that is going to be the key to becoming a millionaire, not a magic salary. That's right. And George, again, I talk a lot about this on the Ken Coleman Show, helping people make a big professional decision, and they're kind of looking for confidence. Clarity, clarity, clarity. You can be confident in an emergency fund when you get clear on all of

your numbers, like you told him to do. Then all of a sudden you go, okay, if this were to happen, I'm good to go. And that's where, again, confidence replaces fear. Absent of information, our mind is powerful, and it will just fill in the gaps. So whether it's in financial, relationship, professional decisions, where I'm not clear, I can tell you I'm not confident. That's good. And it's a great reminder because we talk about doing a budget a lot around here and it's kind of like, ugh, budgets. But when you think about it through the lens of clarity and confidence, man, that changes the game. Now I'm going,

I'm doing a budget because I want to be confident and intentional with every single decision I'm making. Yeah, absolutely. Gia is up in Lincoln, Nebraska. Gia, how can we help? Hi, guys. It's a pleasure to talk to you. Good to talk to you. My husband and I just paid off our house last month. Whoa, way to go.

And we have no other debts. My husband's 30. I'm 25. Oh, my goodness. Wow. And my husband is going to be going back to school in September for HVAC just to increase his income and find something a little bit more stable. My question is this. We kind of have a lot of goals ahead of us of what we want to do. Actually kind of getting to enjoy a little bit of our money because we're still newlyweds.

We've been married about two years, but we haven't really done a whole lot just because we were trying to get our house paid off and just kind of get that behind us. So we're just trying to figure out what we need to do. We kind of have a checklist of things we want to get done and feel we need to get done. But I know you guys always say to focus with intentionality. So we're just trying to figure out, okay, how do we focus with intentionality? Because we're trying to go 18 directions. I love it. Well, what a great problem to have. So there's three buckets that I think will help you guys figure this out. You have a give bucket, a save bucket, and a spend bucket. And just create goals in each one just for the year ahead. And you can still have a five-year goal, but just say, for the next 12 months,

here's our goals for giving. We want to give this much. Here's the organizations we want to give to. We want to have some spontaneous generosity plan in the budget. On the spend side, we want to make sure we're enjoying this money. Let's plan at least two vacations. One person gets to plan one, the other gets to plan the other. We're going to upgrade the car as part of our spending and the savings goal. We're going to start saving up for another house down the line we want to pay cash for. That makes it really clear and it keeps you focused and excited. Okay. And I think our other question is, is so we, you know, have been following RIMS. We were working with a financial or a finance pro. And so we were looking at doing term life insurance. So our question is, do we really need term life insurance? Like,

I understand like the reason for it and I get it, but we don't have kids. We don't have any payments in the world. Like if my income left or his income left, um, we would be, we, we both would be fine in terms of the day to day. And then with my job, they give me, I don't know what it's called exactly, but basically they give my husband two times my annual salary basically the day after i die and he has a small right now he's got a whole life plan we're working on getting that switch so i guess better the question is i know i would i would still get term life in place for both of you then get rid of the whole life once those are in place it's honestly so dirt cheap and it would put you guys in such an incredible position to be able to grieve and not worry about how are we going to put food on the table, even though you're debt

free. You still have a lot of life expenses, funerals. I mean, there's a lot of stuff you'd have to consider, and having term life in place 10 to 12 times your annual income, 15, 20 years, will put you guys in a much better spot. It's a no-brainer. It really is. Just get it. It's so, so affordable. Good stuff. Good advice. Thank you so much for the call, Gia. George, good hour. Fun times. Man, it goes fast when you're having fun. Hey, to you, America, thank you for listening. This is The Ramsey Show. Hey, George Camel here. If you love the show and you want a deeper dive on your money journey,

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